How Can Business Intelligence Improve E-Commerce Accounting?

Posted by Mary Milorrie Campos
Mar 18, 2022
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When you enter the e-commerce realm, it is only right that you also refine your tools and processes. You need to make fast and informed decision-making to keep pace with the competition and reach your market using the right messaging. 

Accounting powered by business intelligence is one way to achieve this. As you read, find out how business intelligence improves accounting, including its practical applications to your e-commerce business. 

Business intelligence in e-commerce

What is BI and why does it matter?

Business intelligence (BI) is the process of transforming raw data into useful information. It involves working with big data — data that are so large and complex to process using traditional tools. 

Processing big data requires business intelligence software. This software retrieves, assesses, transforms and reports complex data into digestible information. It uses dashboards and visualizations, such as charts and graphs, so even non-technical users can understand and use the data in improving their outputs.  

In practical applications, you can use it to study customer behavior, analyze buying patterns and identify market trends. It lets you modify your offerings to fit what consumers want and need at the moment. Your sales and marketing teams can also use it to craft targeted messages and cut through the noise of the online world. 

But take note of this: The information you get on your BI varies on the KPIs (key performance indicators) you set. If you’re still in the planning stage of using BI, consider what information you need to ensure you’re making the most of big data. 


Business intelligence and accounting

Accounting is the language of business. To be effective in using it, you need to know your numbers well. Having knowledge of your products is only a scratch on the surface. You need to dig deeper to support your decisions and communicate them effectively to your stakeholders. 

The use of business intelligence in accounting helps you collect useful insights for analysis and reporting. To do this, you must integrate a business intelligence app into your existing cloud accounting software. You may want to start with basic KPIs such as gross profit margin, net income, customer acquisition cost, sales growth, sales conversion cycle or even external KPIs to analyze consumers’ buying behaviors. 

Read Next: 5 Rules of Business Intelligence and Analytics 


How business intelligence and accounting boost your e-commerce business

Now that we’ve drawn the connection between business intelligence and accounting, let’s see how it applies to your e-commerce business. 

  1. Easy-to-understand visual reports

BI aggregates complex data sets into readable charts and graphs. Its reporting feature gives you a simplified real-time visualization of your business’s financial performance, making it easier to develop better plans and budgets. 

  1. Insights on your product’s demand

Having enough inventory when demand increases is crucial for an e-commerce business. Especially when your product is competitive, your customers can easily click over to a competitor’s site when the item they’re looking for is unavailable. 

Determining when your product is in demand helps you stock up on your inventory whenever needed. For instance, using stockout rate — a KPI that measures the frequency of unavailable items whenever a customer orders — can help you with inventory analysis. 

Here’s an example: Imagine yourself as an online fashion retailer. Using BI to track purchasing behavior and retail trends data can show you what garments and accessories are in-demand year-round and only in a certain season. With this information, you can develop a better purchasing and distribution strategy to deliver the products into appropriate markets at the best time. 

  1. Better decision making

Operating an e-commerce business is not a guesswork. You need accurate and timely data to make informed decisions. 

Continuing with our previous example, consider yourself again as an online fashion retailer who recently released a new apparel collection. To know if it makes sense financially, you can gather relevant data to measure its sales performance. Once you have the data, it will be easier for you to decide if you want to push through this collection or not. 

  1. Clarity on the root cause of problems

Understanding a decline in sales requires more than the use of spreadsheets. While the latter can highlight a problem, it isn’t enough to explain why the problem exists. It also demands a lot of time and effort to aggregate essential data and creates pivot tables.  

BI solutions can collect data from diverse types of sources. From there, you can layer each dataset on top of each other to find the connections between them and determine why the problem occurred.


Accountants’ role in e-commerce accounting

If BI and cloud accounting software can automate most accounting tasks, are accountants still relevant in an e-commerce environment? 

For e-commerce businesses seeking success, the answer is yes. 

Tools like BI and cloud accounting software are there to assist humans. For it to function properly, technology-proficient accountants need to set it up with KPIs you need to track. They can also advise you which metrics matter based on your products, industry, audience and goals. 

Accountants also check the integrity of your business records through the reconciliation of accounts. They double-check if the numbers generated by your software match other transactional records, ensuring that your financial statements are free of errors. 

From manual tasks, today’s accounting professionals are getting more involved in strategic and transformational initiatives. Though number-crunching is still a part of their roles, you’re better off asking them to analyze your e-commerce store’s financial information and how it can affect your operations. 



Our Outsourcing: How to Make it Work guide explores how you can utilize accounting and finance outsourcing to drive growth to your business and add value to your processes.